Wolverine World Wide (WWW) Q2 2026 earnings call transcript

Good morning, and welcome to our second quarter of Fiscal 2026 Conference Call. On the call today are Christopher Nagel, President and Chief Executive Officer and Taryn Miller, Chief Financial Officer. Earlier this morning, we issued a press release announcing our financial results for the second quarter of 2026 in Guidance for Fiscal Year 2026. The press release is available on many news sites and can be viewed on our Investor Relations website at investors. wolverineworldwide. com.

This morning's press release and comments made during today's earnings call include non-gap financial measures. These non-gap financial measures, including references to the ongoing business and constant currency revenue growth rates, were reconciled to the most comparable gap financial measures in attached tables within the body of the release or on our Investor Relations website. I'd also like to remind you that statements describing the company's expectations, plans, predictions, and projections, such as those regarding the company's outlook for Fiscal Year 2026, growth opportunities, and trends expected to affect the company's future performance made during today's conference call are forward-looking statements under U. S. securities laws.

As a result, we must caution you that there are a number of factors that could cause actual results to differ materially from those described in the forward-looking statements. These important risk factors are identified in the company's SEC filings and in our press releases. All revenue growth rates will be cited on a constant currency basis unless otherwise stated.

With that, I will now turn the call over to Chris Suf-Nigill.

Thanks, Jared. Good morning, everyone. Thanks for joining us on today's call. In the second quarter, our business results continue to track ahead of our expectations, driven by the team's strong execution of our global brand-building model. We deliver better than anticipated revenue, growing 6% against double-digit growth last year, with adjusted earnings per share growing 14%, reflecting healthy SGA leverage while at the same time investing in our streets' priorities and key growth drivers.

Maryland's balcony, representing approximately two-thirds of our business, continue to lead the way with revenue up 10% and 9% in the quarter, respectively.

We continue to make progress in building better brands, delivering compelling products, investing more in demand creation and telling better stories, managing the marketplace more effectively, all leading to elevating our brand's positions in their respective markets. As a result, we're seeing the cumulative tangible effects of our consistent efforts. Across our portfolio, our brand's generated increases in consumer interest and took market share in their key categories.

And these gains in consumer demand are creating more consistent growth in the business, with the company having now delivered seven consecutive quarters of a year-over-year growth.

Given the strengthening of our brand, the solid results we drove in the first half and the continued momentum we're seeing in the business. Today, we're raising our guidance for the year, which Tara will walk you through in a few minutes.

But before handing a call over to her, I'd like to share more on our brand, including the continued growth of Maryland's noncony, as well as the products we're making and applying our playbook to set sweaty-buddy and Wolverine on the path to more consistent growth.

I'll start with Maryland. Maryland remains focused on modernizing the outside with faster, lighter, more versatile product, design, and elevated brand relevance. The brand's consistent execution of its strategy has resulted in sustained, meaningful growth and market share gains. And these trends continue in the second quarter. The brand delivered a double-digit increase in revenue with growth in all regions and outside increases internationally, whereas key city strategy has helped amplify the brand's momentum.

Globally, Maryland starts outside marketing platform, launched earlier this year, is creating brand consistency and lifting purchase intent with our consumers.

To extend the platform, the team executed a host of community activations as part of its outside in the city series, redefining the outdoors in several key global cities, including London, Paris, and New York, with more cities planned in the coming weeks.

Merrill once again had triple-digit basis point market share gains in the U. S. height category, now with three in the top 10 styles.

The brand's key franchises, the Moab 3 and Moab Speed 2, are exceptionally healthy, each driving significant double-digit growth in the second quarter. The iconic Moab 3 is respected on the trail and remains relevant, with collaborations and rematerializations like the sought-after and sold-out khakis collab and the recently dropped jelly pack. In trail run, Merrill continues to entrench his position with his title sponsorship of the Skyrunner World Series, composed of elite trail running races around the globe, in locations such as China, Japan, France, Italy, Spain, Chile, Argentina, and right here in the U. S. Merrill's sponsored athletes currently claim seven spots in the top 15 men's and women's standings, including the top four ranked men in the series.

In the marketplace, the brand's mere franchise, the agility peak six, continued to gain traction, up double-digit globally, versus the previous model's comparable first season. On the lifestyle side of the business, the wrapped franchise continues to grow with additional silhouettes, more than doubling year over year at U. S. retail.

The brand also continues to enhance its lifestyle offering with trend-right styles like the Moab 2, woven slide, the low-profile relay, and hybrid Mary Jane's and performance platforms, including the Moab Speed 2 and Speed Arc, all of which are selling well.

In June, the brand engaged influential partners at Paris Fashion Week as it continues to elevate its lifestyle profile globally and looked to accelerate the side of the business in 2027.

Mail is performing well, and the brand remains on track to deliver mid-single-digit growth this year, shifting to sockinging. We continue to believe that socking is uniquely positioned as a disruptive, challenged brand at the intersection of two of the fastest growing categories in the market, performance and lifestyle running. In the second quarter, the brand drove solid growth in both categories and around the world, on top of 40% overall growth last year.

Stock and East Key City Focus, which started London a few years ago, continued to help fuel strong brand heat, consumer demand, and revenue growth, particularly in Europe. In London, the brand held one of its own May's Run Club races early this year. Once again, sponsored the London 10K last month, and plans to sponsor the Run Shortage Half-Marathon this fall.

In addition, Stock and East Expanded its Key City Strategy to Berlin, with sponsorship of the Berlin 10K a couple of months ago, and a broader activation plan underway. And then to Paris, with a May's race back in February, and plans for Hostive Activations, a new Pioneer Shore, entitled Sponsorship of the Eiffel Tower 10K.

Creating ten pole moments by sponsoring race events that each reach a broad running audience, flanked by a series of community activations, often in partnership with Run Clubs and Key Resil Partners, has proven to be an effective strategy.

Stock and East Brand Search Interest was up meaningfully year over year in the first quarter globally, with even faster growth in the UK. This past quarter, the search interest growth rate accelerated by almost two times globally, and it more than tripled in the UK, and France grew at an even significantly faster pace. Sales through trends in the EMA region are also very strong, creating a healthy pole dynamic, which we are actively managing to cultivate sustainable growth, focusing on discipline distribution and segmentation strategies.

Because of these positive results, our Key City playbook is now being adopted by some of our distribution partners around the world. Our latest Stock and East are open in Hong Kong in the second quarter, and they're already plans to activate in Istanbul and Bangkok this year, with race sponsorship and May's events of store opening and community activations on tap.

In the performance running category, Stock and East gain market share at US Run, especially in the quarter, and showed wealth in major marathons this spring, ranking in the top five most worn brands at Boston and London, notably second among women at the Boston Marathon. With the brand's endorphin collection, its pinnacle offering for elite runners, Stock and launched a new version of its most innovative shoe, the Endorphin Elite 3, and plans to launch an all-new Endorphin model in 2027 that we believe will further elevate innovation performance for serious runners.

In Stock and East core four franchises, which are targeted towards a more casual runner, the brand introduced the new Triumph 24 hurricane 26 in the last couple of months, and they are driving franchise growth on Stock and dot com in early selling, with positive feedback from our whole sale partners.

Stock and East also continue to fuel brand heat in its lifestyle business with compelling styles and thoughtfully selected collaborators who are helping develop the brand's relevance on several different dimensions. In the second quarter, the brand dropped collaboration with the Studio Nixon, Grayson, two with engine requirements, and Minted New York, the last of which was launched in an event hosted at our Covent Garden Pioneer Store in London, generating exceptional brand energy.

Later this month, the brand plans to drop a highly anticipated collaboration with West Side Gun, building on a partnership that continues to strengthen the brand's credibility in streetwear and culture. In June, Stock and East launched the Ride 1 as part of its extensive Paris Week fashion presence, including a host of activations, inferential collaborators, retailers, and consumers.

The brand also introduced the Canvara 1 and Pro Grid Paramount in top of the pyramid distribution, while the Pro Grid Omni 9 continued to drive growth globally.

Looking at the brand continues to develop its lifestyle strategy, leveraging its deep and diverse product archive, developing sharpness behind streetwear and fashion, and thoughtfully cultivating greater relevance with women as well as men.

Finally, as we think about realizing Stock and East full potential, I believe that should include becoming a true head-to-toe, run lifestyle brand. In close partnership with our sweaty-bedded product design and development team, we're developing a capsule of apparel collection designed specifically for her that we plan to drop in our stores and online early next year. I'm excited for this test and leveraging the collective power of the company and whether this opportunity could mean longer-term to the Stock and East brand.

The brand's momentum remains strong, and we're raising our outlook for the brand to Minted Team's growth for the year. I continue to believe that Stock and East well-positioned, and that the opportunity for the brand remains significant.

And Alex brought an update on the progress of sweaty-bedding and Wolverine. Brands that were focused on returning to sustained healthy growth through disciplined execution of their strategies and implementing our proven brand growth playbook. It's important to note that while we don't expect informants to be perfectly linear, we're encouraged by the recent progress we've made and the real results we've seen in the marketplace.

Both brands are re-establishing their premium positions, driving meaningful increases in consumer interest and purchase intent, and beginning to deliver growth in key segments of their business.

Beginning with sweaty-bedding. Sweaty-bedding is one of the original female activewear brands and focused squarely on empowering women through fitness and beyond. Last year, we fully integrated this business into Wolverine Worldwide and developed a new strategic growth plan. As part of this effort and has noted previously, we initiated an intentional and strategic reset of the U. S. market in the third quarter of last year.

As a result, the brand was down low single digits overall in the quarter, but encouragingly grew approximately 3% when excluding the impact of the market reset in the U. S. The areas of the business that we've prioritized are responding positively to distributed growth in the quarter. The U. K. direct-to-consumer business grew mid-single digits with continued increases in key categories like bottoms and autoware.

We're seeing our investment in the brand's new store design lift performance as well, with four refits completed so far this year. The expansion of wholesale distribution partners in Europe and Asia Pacific also continues to advance with revenue of strong double digits and discussions for new partnerships progressing well. During the quarter, the brand executed several activations to continue to strengthen its bold, rebellious voice in the marketplace.

It's born sweaty, go-shorty campaign, increased purchase intent, and helped drive strong revenue growth in the shorts category. The brand also effectively positioned itself relative to popular activities, including running with its rule-to-run event in April and racket sports with its power-by-london pedal event in June and a Wimbledon event in July, all driving strong consumer engagement for the brand.

The sweaty-bedded brand is healthier today with a strong strategy in place and a determined team driving the business forward. We have more work to do, but I'm encouraged by our progress.

Finally, finishing with Wolverine. Wolverine is number one work food brand in the U. S. and again added market share in the second quarter. It's third consecutive quarter of gains. The brand grew revenue high single digits in the quarter and we continue to make good progress driving towards more consistent, sustainable growth. Wolverine is focused on managing a cleaner, more disciplined marketplace and elevating its positioning with consumers.

Behind these efforts in the stronger product line, the brand continued to lift average selling prices and drive double-digit growth in key franchises at retail, including the trade wedge in load or two, and in western booths with the rancher in Wheatland. Re-calibration of the marketplace to optimize the sortments and inventory of key retailers is still ongoing, resulting in some expected choppiness and near-term volatility of retail, but inventory is continuing to get cleaner and our new distribution and segmentated strategies while nascent are sharper.

In the quarter, Wolverine also continued to build brand relevance by engaging consumers with more purpose-led and differentiated marketing. The brand's collaboration of Metallica Scholars introduced a limited edition boot and work reflection that benefits trade's education, and its American dream contest launched from made in the USA loaded to Durashock's boot and celebrated 50 trade people in our 50 states.

These initiatives and previous upper-final investments, like the brand's partnership with the Paramount Plus series Landman, help further accelerate growth of consumer interest in the quarter.

Work remains to get us to where I believe we should be, but Wolverine's new product innovation and designs are performing. The brand's marketing is reaching working consumers and cultivating greater emotional resonance in the marketplace is responding. Importantly, we've added some new talent to the brand and prioritized its place in the workgroup portfolio. I continue to be enthusiastic about the brand's opportunity looking ahead and what a growing and more profitable Wolverine brand and workgroup can deliver for the company.

Now, I'd like to hand the call over to Aaron Miller, our Chief Financial Officer, take you through our results for the quarter and our update outlook for the year. Aaron?

Thank you, Chris, and welcome, everyone. Our second quarter results exceeded expectations and reflect the continued progress we're making across the business. The operating model we've built, combined with continued investment in our brands and capabilities, is strengthening the portfolio, improving profitability, and reinforcing our confidence in the long-term earnings potential of the company. Merrill and Sockney drove the company's revenue growth in the quarter.

Growth, combined with discipline cost management, contributed to 80 basis points of adjusted operating margin expansion, while further improving our balance sheet and financial flexibility.

Given our strong first-half performance and continued execution across the business, we are raising our full-year 2026 outlook. I'll now take you through the highlights from our second quarter. Revenue of $506 million exceeded the high end of our outlook, driven by better-than-expected performance in both the active group and work group. Reported revenue growth with 7% compared to the prior year, or 6% on a constant currency basis.

The following channel, segment, and brand performances provided on a constant currency basis. Full-cell revenue increased 8% compared to the prior year, reflecting strong international performance and continued growth in the U. S. DTC revenue was approximately flat versus the prior year. Active group revenue increased 8% in the second quarter, with performance across the segment exceeding our expectations.

Merrill revenue grew 10% in the quarter. Strong wholesale performance was driven by international markets and continued gains in the U. S. Ongoing strength in sell-through across core franchises and key accounts supported the brand's momentum.

DTC revenue declined compared to the prior year, reflecting a deliberate shift in marketing investments towards upper funnel brand building activity.

Sock and E revenue increased 9% in the quarter, building on 40% growth in the same quarter last year, driven by growth in both wholesale and DTC.

Whole-cell growth was led by international markets with continued gains in the U. S. The brand continues to build momentum across both performance and lifestyle categories, supported by ongoing marketing investments and new products that are resonating with consumers.

Sweaty Betty revenue declined 3% in the quarter, reflecting the planned and ongoing reset of its U. S. business. The brand delivered another quarter of growth in U. K. DTC and international wholesale, reflecting encouraging consumer response to its broader product assortment.

Workgroup revenue declined 2% compared to the prior year, which was modestly ahead of expectations. Progress across the workgroup portfolio continues to vary by brand, but the actions underway to enhance product offerings and improve marketplace health are beginning to gain traction.

While there's still more work to do, we are encouraged by the early results. Consolidated growth margin was 46.5%. A decrease of 70 basis points from the prior year and 10 basis points above our expectations.

Gross margin was pressured by an approximate 310 basis point, unmitigated tariff headwind, and a modest impact from elevated oil prices on freight costs, although mitigation actions offset most of the tariff impact.

Adjusted operating margin was 10%, an increase of 80 basis points compared to the prior year and 50 basis points above our expectations.

Tariff related pressure on growth margin was more than offset by strong revenue growth and discipline management of operating expenses.

As a result, adjusted diluted earnings per share increased 14% year over year to 40 cents, compared to 35 cents in the prior year and above our outlook of 35 to 38 cents.

Net debt was $443 million down $125 million versus last year. Turning to our outlook for 2026, we are raising our full year outlook and now expect revenue to be in the range of $1.98 billion to $2 billion, representing reported growth of approximately 6.2% at the midpoint. This compares to our prior outlook of $1.96 billion to $1.985 billion.

Our foreign currency assumption is unchanged at an estimated $14 million benefit versus the prior year. As a reminder, the prior year included a 53rd week in the fourth quarter, which contributed approximately 70 basis points to full year 2025 revenue growth, primarily within our DTC business.

On a constant currency basis and excluding the 53rd week in 2025, we now expect revenue to increase approximately 6.1% at the midpoint.

The following segment and brand outlook is on a constant currency basis. Active group revenue is now expected to increase high single digits up from our prior outlook of mid-single digit growth. We continue to expect work group revenue to be approximately flat compared to 2025.

At the brand level, we're raising our outlook for socony to mid-teens growth, the high end of our prior low to mid-teens range. Reflecting the first half performance and continued momentum across categories.

The investments we're making to build consumer demand are strengthening the brand's market position and driving durable growth. Our outlook for the remaining brands is unchanged. With Merrill expected to grow mid-single digits, sweaty Betty expected to decline low single digits and Wolverine expected to be approximately flat compared to 2025.

Gross margin is now expected to be approximately 46.9% compared to our prior outlook of 46.4%. The improvement primarily reflects stronger marketplace execution, supply chain efficiencies, and modestly lower tariffs.

With respect to tariffs, our updated guidance assumes existing tariff rates remain in place for the balance of 2026. This assumption reduces the estimated unmitigated tariff impact by approximately $2 million compared to our prior outlook. While we continue to believe rates may ultimately return to IEPA levels, the timing of any change remains uncertain.

Our guidance excludes any potential refund related to the $36 million of IEPA's tariff previously paid, which we continue to actively pursue.

Adjusted operating margin is now expected to be approximately 9.9% compared to our prior outlook of 9.5%. Reflecting the higher gross margin and meaningful operating leverage for the year, while also making strategic investments in our brands and key capabilities.

Interest and other expense is projected to be approximately $23 million and the effective tax rate is projected to be approximately 18%. Both unchanged from our prior outlook.

As a result, adjusted diluted earnings per share is now expected to be in the range of $1.55 to $1.65 compared to our prior outlook of $1.43 to $1.58.

We are increasing our operating pre-cash flow outlook to $115 million to $130 million from $105 million to $120 million previously.

We continue to expect capital expenditures of approximately $20 million. Moving to our third quarter outlook, revenue is expected to be in the range of $495 million to $500 million. Representing reported growth of approximately 5.8% at the midpoint compared to the prior year. On a constant currency basis, revenue is expected to increase 6.5% at the midpoint. Active group revenue is expected to increase high single digits while the workgroup is expected to be approximately flat to the prior year.

Gross margin in the third quarter is expected to be approximately 47.4%. Down 10 basis points compared to last year. This includes an approximate 180 basis point unmitigated tariff impact and a modest headwind from higher oil prices on freight costs with mitigation actions and other business initiatives offsetting the majority of those impacts.

Adjusted operating margin is expected to be approximately 10.4%, an increase of 130 basis points compared to last year, with the improvement driven by revenue growth and discipline cost management, which more than offset the impact of higher tariffs and elevated oil prices on gross margins.

As a result, adjusted diluted earnings per share is expected to be in the range of 42 to 45 cents compared to 36 cents last year.

To summarize, our second quarter results reflect continued progress across the business, led by the strong performance of Merrill and Sockney, where improving profitability, strengthening our financial position, and seeing encouraging traction across the portfolio. Our balance sheet is meaningfully stronger than it was two years ago, and while the external environment remains uncertain, our confidence in the business continues to grow.

Our increased outlook for 2026 reflects both the strength of our first half results and the progress we're making across the portfolio. With that, let me turn the call back to Chris before we open up for questions.

Thanks, Taryn. To close, I believe our brands are about a position in the marketplace today, aligned wealth consumer trends, and their leaders and innovators in growing in attractive categories. And importantly, they continue to get stronger each quarter around the world, both those that are already performing like Merrill and Sockney, and those that are not yet as consistent as we want them to be.

Our team is better, our strategies are more sound, our execution is sharper, and our brands and company are healthier. As a result, our business is better than we anticipated entering the year, giving us confidence to raise our guidance for 2026. Another important chapter in our transformation story that's now become a growth story. While our progress is encouraging, we believe a bigger opportunity is still ahead of us. For the company, our team, our brand, and our shareholders, and everyone at Wolverine Worldwide remains focused to make every day better.

With that, thank you for taking the time to do this this morning, and we're happy to take your questions. Operator?

Sure. Thanks, John. Yeah, the run category is obviously a very attractive and growing category, and we're thrilled that we have one of the original running brands in Sockney performing the way it has in the trajectory we see. But certainly fiercely competitive and we've got sort of great respect for the competition that's out there. At the same time, we think we've got a great team in fielding, I think, one of the strongest product pipelines that we've had.

And it's good. I think we're in a good position. As it relates to the acceleration in the back half, I think you did point out a good 9% growth in the second quarter on top of 40% growth last year and a little bit easier comparison going into the back half. But visibility remains good. I think the important thing to note about Sockney is it really is a global growth story. It is not just a U. S. sector growth story. So really pleased by the progress we're seeing really around the world, the way our partners are leaning in and the receptions that we've seen to both performance run and the lifestyle. So we remain bullish on Sockney and think the prospects.

So the brand remain bright.

Yeah, thanks for the question. Regarding our growth margin, operating margin in higher expectations, there's been no meaningful change to the tariff impact we've previously discussed. We said that we had previously estimated around headwind of around $50 million on the year and that assumption is reduced by roughly $2 million, which really leans towards the what we're seeing in terms of the bigger rates that we're seeing in terms of growth margin and operating margin versus our previous expectation is the structural changes we're seeing in the business, really driven by the stronger revenue and seeing more full price sales from healthier inventories and the supply chain efficiencies driving structural improvements in the business.

Thanks, John.

Yeah, it's a smaller portion of the performance or outdoor business for sure. But we certainly think about Merrill today as the broader outdoor lifestyle opportunity beyond the trail. And I think the team has worked really hard on that. And I'm really pleased with the progress that we've seen. And I think you're sort of seeing some of that come through in our one chair. All efforts are sort of bridge that performance to lifestyle piece. And then certainly obviously legacy styles like the jungle mock, which continue to grow. But then importantly, the team being able to sort of tap into trend seeing things like the relay, the wraps collection and then taking sort of classic outdoor platforms like the Moab speed and so forth and so on, and making them in more lifestyle styles, like our slides, or just rematerializing and make them for everyday wear.

And I think you see that you're seeing that show up. Importantly, I think in our marketing as well, just how we're presenting the brand at Merrill. com, how we still on our social feeds. And I think the team's done a great job sort of bringing the outdoors to the city. Under the platform of it starts outside. So the bigger opportunity beyond beyond outdoor is certainly outdoor lifestyle.

And I think that is going to be a key unlock. And certainly, as we think about Merrill's trajectory over the last handful of years to market share gains, the consecutive quarters of growth and the outlook we have, I think that's a piece to it. Importantly, we have to open up appropriate distribution. And I think our sales team has done a nice job opening up new doors for us to show up where that product is sold, and specifically where it's sold to her. So really pleased by the progress in total. And I think the greater lifestyle opportunity beyond beyond the trail for Merrill. But I can't discount the fact that we still are the leader in trail.

Three of the top 10 styles for the first time in the last quarter came from Merrill, and really extended our market share lead there by triple basis point gain again. So really pleased in total by the Merrill business and certainly the trajectory that we see.

Sure, I'll answer the two specific questions that you have a good memory. The run specially share it. We did gain in Q2, and that was an improvement over Q1, which we are encouraged by. We anticipate second half lifestyle doors to be approximately flat to first half, but no change from which all due in February. And I certainly think the momentum we continue to see in Sockney is encouraging, not just here in the US, but certainly around the world.

And I think, you know, back to John's earlier question, like the running category, brands that innovate and bring fresh new product to market. I think those are the brands that are winning. And I think Sockney has done a great job, whether it's the Azure launch this year, which would be the biggest single launch in the brand's history to updating core for the trying from the hurricane.

We've been a new endorphin elite out, and I think the best, best, fastest endorphins can be coming out in 27. So brands that continue to innovate, I think will continue to win. And we certainly remain bullish on the Sockney product pipeline and the way that team is driving the business.

Thanks, Mitch.

I'll try to remember those questions. And I'll maybe I'll go in reverse order. Triple basis point, triple digit basis point gain for Merrill again. The number one leader in hike with three of the top 10 styles in the U. S. today. And a lot of credit to that team on what they have done.

As it relates to Merrill DTC, I would say at total across the portfolio. I think the underlying health of our brands and the performance globally. We continue to be strong and you're seeing that show up in brand health metrics. We will search interest in market share gains. And I think that is a credit to the work that the teams have done over the past couple of years. As it relates to DTC, I think the story is a little bit different by brand. And for Merrill specifically, we're consciously moving marketing dollars up the funnel to work on awareness for the brand. That has always been sort of a lagging, lagging indicator for us. And I think our team in place is now more persistently moving those dollars up the funnel.

Which we think is in the long term best interest of the brand globally. And I think you're seeing those things begin to take through in those brand health metrics, which we think will help both our wholesale business and our DTC business. But that conscious shift in marketing spend obviously puts some pressure on Merrill on the short term at indirect to consumer. We think that will even out over time. And we do think is the best long term interest. And I'm fortunate to be in a position where we can go do make these decisions about our investments across the portfolio as different things are working. To best manage the brand, manage the company in our brands for long term sustainable growth that ties ties back to our value creation models.

So we remain really optimistic about Merrill. We do know that the DTC business, we know that that we need to improve that. But I do think we're taking the right steps today to show longer term improvement. So we remain bullish on on Merrill's global opportunity. Both here in the US and around the world, as well as wholesale and our own channels.

Yeah, good question. We're really pleased by the progress in Ima and give a lot of credit to that team over there. Take everyone back to sort of February of 24. That really was the start of our key city strategy. And the company's key city efforts really started with Sockney in Europe specifically in London. And we think a three years sort of moving three years past that that really has helped elevate that brand and awareness. In affinity in that market and we're seeing a strong uptick there. We've led with performance run both in from a product standpoint and from an activation standpoint. You know, really sort of doubling down on London's sponsor London 10k investing and run clubs.

And that decision to really to really distort investments to London has really paid off. And now we're beginning to take those learning to other cities Paris and Berlin and beyond. And then we sort of followed run with with life. And we learned from the U. S. and how to roll that out. What what what how we can win as we roll that out and we're applying those learnings to the rest of the world. But certainly if I think about regions that are again, Sockney in total is performing very well stand out regions would certainly be Europe.

Yes, thanks. Thank you for the question, Peter. At the end of the second quarter, you noted the inventory was down around 17% in the prior year. Overall, our inventory is in a healthy position year over year decline is that's really a combination of timing factors and timing of receipts as well as the continued benefits that we're seeing from our efforts to improve. We've talked about before our efforts to improve our inventory management and our productivity across the portfolio. So the combination of timing as well as those initiatives we've been taking to be more just some of our working capital or what you're seeing to be specific to your question.

And important, we are confident we had at the current inventory levels that we're at together with the planned receipts in the second half, they'll fully support the increased revenue outlook for 26.

Thanks, Peter.

Yeah, certainly. Thanks, Maurizio. Yeah, I think our raise in Saucony reflects both the delivery that we've had and certainly our outlook for the second half. And I think it's important. It is sort of broad based growth. It's run and it is lifestyle and we're seeing, you know, nice business, healthy business around the world. So we remain optimistic. With all of that said, it is a fiercely competitive space. We've got a tremendous number of great challengers, but I think brands that are bringing compelling, innovative product, packaging them with great stories and then working hard on the ground game to win that battle on the floor. I think those brands will continue to win. And obviously the game and the improvement in market share gains this quarter versus last quarter gives encouragement.

What we're seeing at Saucony. com gives us encouragement. And then importantly, just the feedback from our partners and what they're seeing and hearing. So, and again, I think it's important. I know, I know we focus a lot on the U. S. business, but I think it's important to say that you know, Saucony is a global growth story, which I got the earlier question about Europe, the progress that we're seeing over there. So it is broad base. And I would say pointing to the diversification of Saucony's growth beyond one category, beyond one channel, the fact that we can grow performance around the fact that we can grow lifestyle, the fact that we can grow globally, the fact that we can grow DDC and wholesale.

I think that diversification is part of the brand growth story beyond just a few styles in a specific channel. So we remain optimistic about the potential for Saucony. We think it remains great and it's our job to go chase that growth responsibly.

I'll talk about Mero first and then Taryn can hit the second point. Yeah, again, really encouraged by the progress that we have seen in Mero. And again, it's important to note it's sort of iconic pieces that we have breathed new life into like the Moab 3 that continues to be just a dominant boot in the marketplace. It's the Moab speed to which we introduced a few years ago on how important or franchise that that has become.

And then thoughtful sort of segmentation distribution strategies and really managing the marketplace well. And again, it's not just a US story from Mero. We're seeing good upticks and performance across Europe as well. And obviously we've got important businesses in Asia Pacific with their partner out of Japan and obviously X step in China. And so I think both the performance outdoor piece as a lifestyle piece give us encouragement.

And then I would really point to what we anticipate to be a market market marketing investment in the brand this year is to around the new. It starts outside platform that the team has developed and seeing market share gains in Mero continues seeing very strong Google search interest globally for the Mero brand. I think gives us confidence and it's important. This is, you know, Mero was the first brand to lead the company out of the turnaround in the back half of 2020. The first company to grow consecutive growth quarters and then a long string of market share gains actually accelerating the triple digits in the quarter. And I think it's also important to know if domestic in the US that high category had been under pressure for several years.

We're actually beginning to see high category grow. And I think all of those things bode well for the outlook for Mero. So good first half, no change in the second half outlook. Now we're going to go execute.

And we're building on John's earlier question when I talked about the. You know, more significant part of our majority of our increase in our margin outlook was due to structural marketplace execution to put more color on that. That's things like healthier inventories and brand heat that is driving more full price sales. You know, Chris just talked to investing in marketing and brands and capabilities. That is part of that brand heat that enables us to drive more full price sales as well as product design optimization. So working with our supply chain teams and working with brands in terms of how they're driving cost efficiencies as well as in the supply chain team. They look at logistics and their sourcing in terms of how we're driving saving.

So when I'm talking about structural or marketplace execution, it's really across the board in terms of getting those more full price sales with investments we're making in our brands and our capabilities. The supply chain working with the brands and with our teams in terms of driving efficiency there as well.

Thanks, Maria.

You can hear your dog. Sorry about that. Sorry.

Sure. Thanks for the question. We are certainly encouraged by the progress we're seeing out of our work group and specifically Wolverine brand. I think a more thoughtful strategy really focused on actually in our global brand building model, amazing products, great stories and then driving the business. Encouraged by the results in two queue for Wolverine brand. At the same time, we acknowledge that there's more work to go do and we don't anticipate the results to be a perfectly linear moving out from here. So there will be some choppiness.

Both as we get that brand up and running again, the product line hits. And importantly, we really addressed the channels and make sure that channels are clear. And we've got the right product inside the right doors and importantly with the right activation. But I think about the global brand building model. I think about our brand growth playbook, which we've deployed with Maryland Sompany. I think that the Wolverine brand is really focused on the right thing. What is that innovation? What product are we bringing? What consumers are we targeting? And then how do we plan to sell it in and sell it through at wholesale?

I think the marketing piece, some really good moves by that brand over the last handful of months, the partnership with Landman to really raise awareness and a lot of sort of on the ground activations taking place right now. And then I think importantly, just a very thoughtful segmentation and distribution strategy at US wholesale and getting back to that core core work business. So I think the brand is doing the right things. We're certainly pleased by the early results, some of the metrics that we're seeing beyond just the P and L consumer interest and Google search interest. I think those things are positive. At the same time, we acknowledge there's more work to go do and we don't expect it to be a perfect linear path from here on out.

But with all that said, I remain enthusiastic about that team, the work they're going to go do, and certainly what a healthier Wolverine brand and a healthy work group can mean for the greater portfolio.

Great. Great couple of questions there. I'll hit sweaty Betty first, you know, we really worked hard really about a year ago this time on a strategy for that team spent a lot of time in London with that leadership team and and really came came down to several key moves that we had to go do and really sort of doubling down on what we thought what was most important and that team has done that work and executed with great determination.

And I'm encouraged by some of the early results and we're seeing some improvements in our UK direct consumer business and that that is a little bit of a challenge market right now just in general that consumer.

And we finished the integration of sweaty Betty into the Wolverine portfolio last year and part of that was to plug their business their business into our international three team market versus trying to go do it ourselves around the world. And that has sort of paid off with some early gains and encouraged by some of the recent progress in the cross year and into Asia Asia Pacific. And I'm excited about the prospects for what that can mean for that business as well. The U. S. reset that really began to happen in the third quarter of last year and we will shortly lap that which will provide some easier comparisons. So I remain optimistic about where sweaty Betty is the improvements we've made.

All of that said they operate in an attractive yet fiercely competitive category and the UK market certainly has been under a little bit of pressure over the past handful of months. But optimistic about the new strategy the early results that we're seeing every time I'm with that team I think the product gets better and better and really pleased with the stories they're telling in the marketplace.

And I think that team does a good job as anyone driving the business each day so please please with please a sweaty Betty progress. And then it relates to talk in the U. S. lifestyle we did talk about that door counts are about where we had anticipated them to be when we spoke to you last. But we are encouraging that we are seeing the inventory and the channel begin to clip and we are seeing those doors being more productive.

And that's an important piece you know we want to run productive doors we want to drive sell to we want to operate with a pool model. And I think we're working hard to optimize that business. And even even with where that U. S. lifestyle was the last couple of quarters really pleased that we can post growth and certainly raise our outlook and our optimism for the back half of the year after what we've seen the first half of the year.

Thanks so much.

Yeah. Thanks for the question. And we agree with you, you know, even with the great performance of the Sockney team over the last handful of years, 25 being a record year. We still view ourselves as a small challenger brand in a very attractive category. And that gives us both optimism and drive to go do to go be bigger and better.

And I think Sockney possesses some amazing attributes, you know, a century old brand, one of the OGs known for innovation, loved by serious elite runners known for bringing great products to market. At the same time has been able to tap into the intersection of performance run and lifestyle culture in a very special way and doing it in a very sort of unique, unique way in an authentic way. And I give that team a lot of credit credit for what they've done. So the ability to grow both performance run more casual run lifestyle run and then sort of grow street and fashion. I think that is an amazing, amazing opportunity ahead of us. And we're not sitting back feeling good about what we've done the last couple of years.

We look out and see what the opportunity can be. And importantly, it's not just a one region story. We're seeing, you know, a really strong pick up in markets like Europe, which I previously mentioned. We have a great partner in China, an expert there who's helping us grow that business. I was in Tokyo a few months ago and saw Sockney on the streets in Harajuku and really gives us a lot of confidence. And I even mentioned today, an apparel and accessories opportunity beyond just footwear, tapping into the sweaty Betty team, tapping into the collective genius of the broader corporation to bring products to market. So excited about what that opportunity we're going to test that and learn and then go from there.

So I agree with your with your premise is that despite the success we've had, it's still relatively small. I would agree with that. And certainly, if you believe the total just the market, the size of our competitors, it's our job to go to go chase that growth right now in a responsible way. And that's what our team heads down trying to do.

Thanks, Dana. I think innovation is paramount in our business. Someone once told me if we got the right product, everything else matters. We don't have nothing else matters. And I think that was true then. And it's true now. So truly innovation is critically important. I would say it varies a little bit by the categories which we plan. I think there's a different expectation maybe in work versus outdoor versus run versus apparel like sweaty Betty. But first and foremost, you have to bring great products that are driven by consumers insights that solve consumers problems that are priced right and placed right within the marketplace. And I think if you look at the where we're winning today and not just Wolverine brands, but the broader category is sort of brands brands that can do that.

Brands that bring great products that's visually distinctive that help solve consumers problems that are placed right and priced right. I think those brands will continue to win in any environment. I think too about our ability to grow and the responsibility to drive growth for the company. I would think about how we've shaped the portfolio over the past couple of years, brands that we have we have invested of and brands that we've chosen to double down on. We've chose brands that we thought would be aligned well with consumer and macro trends. And I think that is playing out. The categories which we play in are some of the healthier categories in footwear and apparel today. And that's where our brands and our company is focused.

And importantly, not only did we do that reshaping the portfolio, we worked to distort resources towards we thought were the highest, fastest value ads first. And you can see sort of what talking has been able to do and how Merrill has been a fast followers. So at the same time, all of that. I also think we've worked hard to make our brands more premium, bringing more innovation, telling better stories, placing in the right, right doors. And then I think we can talk about what price they can be placed at and then obviously what the margin implications are. As far as apparel and accessories. I do think that remains an opportunity for us. And I think we've learned a lot for what a sweaty Betty has brought to the business.

And I certainly think Sockney has an opportunity to play there in a bigger, bigger way in leveraging the expertise of the sweaty Betty brand to help a very good Sockney product team. I can't wait for that test to come live and hopefully there's something there that we can go chase to be another growth lever for the company and the brand moving forward.

Thanks, Dana.

Yeah, thank you, Anna. The SGNA wouldn't call out any timing. If you if you look at the Q2 performance, the SGNA was really a reflection. The improvement there was driven by stronger revenue. So we were able to get leverage from the revenue beat flowing through in SGNA. So I wouldn't call out any timing as it relates to the second quarter performance.

When when we look at the balance of the year, you know, at the at the midpoint of our 26 guidance, our implied SGNA as a percentage of revenue is largely consistent with what we said in May and that reflects a decrease of around 130 basis points to last year. And as we consistent with what we said in February, as well as what we said in May is we're continuing to invest in our brand. Chris talked about the growth, enabling capabilities, whether it be in marketing, the key city activations, digital initiatives.

And so we do continue to invest in those areas and remain disciplined across the rest of the cost structure and that that is helping improve the profitability what we've seen year to date and expect for the balance of the year.

We did not want to fight. Sorry, you asked about oil. I didn't want to fight. It was, I would say it was modest is how I would describe it. Certainly, we would expect it to be a bit more in Q four than in Q three, but just given the revenue and the shipments, particularly any commerce in the fourth quarter, but I wouldn't still describe it as modest.

I appreciate the question. Yeah, DTC is a significant focus for us these days and how we can get that business moving with the way, the way the rest of the organization is I think the story is a little bit different by brand. We're really pleased with the progress we made in talking and seeing good growth in our DTC channel there. Sweaty Betty, obviously, is hampered by the US reset, which we will very quickly lap. And then we previously talked about, talked about about Merrill. We are really focused on both being working to become less promotional, having a higher full price mix and then telling more frequent, better stories and our online channels. At the same time, really being thoughtful about how we're spending money up and down the funnel and where we choose to spend that.

So we are, we acknowledge that there's more work to go do in DTC, but certainly pleased with the progress overall and total. And I do think we're taking the right steps to get that business checking the way most of the rest of the company is checking, obviously, entering an important holiday selling season in the next few weeks as we work towards the end of the year. So, we are very focused on improving the DTC performance overall. But at the same time, really pleased with our brand sit in general.

Thanks, Donna.

What was your second question on margin? Well, the mix of your geographic mix of business, internationals generally higher margins than domestic. So was the international business better than you anticipated? And how if so, how much did that help the gross margin in the quarter? And how much of that is built into the increase of the gross margin guidance for the year?

Yeah, the timing shift. There's two pieces within the timing shift. There was a piece that related to last year, frankly, was one of them in terms of the receipt last year versus receipts this year. And then there was some between what I would call to your point between call it June and July in terms of a delta. So the timing shift is across both.

Both of those components. I think that what I what I want to stress, though, which I said earlier when Peter asked the question. And we are confident that with the inventory that we have and that the inventory that we're receiving that we are supporting the higher growth. And to put a finer point on that, I've talked before about, for example, Wolverine, we had more work to do to get that inventory in a better place. That was one of the drivers of the decline we saw from the more efficient versus some of the more timing piece was more in.

Sweaty Betty and Merrill, Sockney was not a driver of the decline in terms of the inventory. And when you think about where our raises for the balance of the year on Sockney and the brands in total, we are confident we have the right inventory to meet that demand.

Yeah, good question. Lifestyle is approximately less than a quarter of the total business today, but we certainly see that as an opportunity for us. And it gets part of the pivot we're trying to make with that brand is obviously maintain our dominance on the trail. And I think that that's coming through in our market share gains and how we're seeing that business at the same time the broader outdoor lifestyle opportunity beyond the trail. And then specifically with her, I want to make sure that I emphasize the focus that we can have a better split between him and her and what that opportunity presents for the brand. So I think there is ample opportunity if we can crack into that lifestyle piece in a more meaningful way and then certainly bring trend right, colored right, priced right products that solve problems for and then make sure they show up in channels where she shops.

And that's what I think the team is really focused on. So optimistic both about protecting that core business, which we've done a nice job of and then a broader lifestyle opportunity, which I think provides a lot of runway for the business beyond where we are today.

I would say I would say we saw a lot of strength and performance in the quarter. I think that that came through in the market share gains. We talked about increases in the classic Mo F 3. We talked about the Mo F speed to with three styles on the top 10. And certainly we think about the broader broader mayoral business beyond just the US. It very much is a performance brand in many parts of many other parts of the world. So please do the progress in Maryland total believe there's a very strong opportunity in lifestyle, but the performance piece showed particular strength in the previous quarter.

Thank you, Sam.